Key investment points:
Current market review
In the current period (1.08 – 1.15), the Shanghai Composite Index closed at 3521.26, down 1.63%; The CSI 300 index closed at 4726.73, down 1.98%; SME 100 closed at 9452.97, down 1.25%; In the current period, Shenwan pharmaceutical and biological industry index closed at 11200.58, up 2.41%, ranking first among Shenwan’s 31 primary industry indexes. The seven secondary sectors outperformed the Shanghai Composite Index, CSI 300 and SME 100.
Important information
On January 10, Premier Li Keqiang presided over the executive meeting of the State Council. The meeting once again stressed that it was decided to normalize and institutionalize the centralized procurement of drugs and high-value medical consumables, so as to further reduce the medical burden of patients. In the next plan, the meeting mentioned that the centralized collection coverage of high-value medical consumables should be gradually expanded, and the centralized collection of orthopaedic consumables, drug balloons and dental implants concerned by the masses should be carried out at the national and provincial levels respectively.
On January 11, the National Health Commission issued the national eye health plan for the 14th five year plan (2021-2025). By 2025, the overall level of eye health of children and adolescents will continue to improve. The coverage of effective ametropia correction has been continuously improved, and the number of visual damage caused by high myopia has been gradually reduced. The national CSR has reached more than 3500, and the effective cataract surgery coverage has been continuously improved.
On January 13, Yunnan Medical Insurance Bureau and other three departments jointly issued the notice of Yunnan drug administration on establishing and improving the “dual channel” management mechanism of national medical insurance negotiation drugs, which made it clear that all guotan drugs (including generic drugs with the same general name and biological similar drugs) were included in the scope of “dual channel” guaranteed drugs and dynamically adjusted.
On January 14, 2022, the national medical security work conference was held in Beijing. The meeting made it clear that in 2022, the total number of national and provincial centralized procurement drugs will reach more than 350, solidly carry out the centralized procurement of high-value medical consumables, promote local governments to actively carry out the centralized procurement of drug consumption, and realize the pattern of promoting the centralized procurement of chemical drugs, biological drugs and Chinese patent medicines in an all-round way.
Core view
The pharmaceutical and biological industry index rose 2.41% in the current period, ranking first among the 31 primary industry sectors of Shenwan. The seven secondary sectors outperformed the Shanghai Composite Index, CSI 300 and SME 100.
In terms of epidemic situation, Omicron mutant is having a significant impact on the development of global epidemic situation. Overseas, on January 14, more than 3 million new cases were confirmed worldwide, and more than 970000 new cases were confirmed in the United States, a record high since March 2020. According to the WHO briefing, 58.5% of the global uploaded gene sequences in the past 30 days are Omicron strain, which is spreading fast and has strong infectivity, and is rapidly replacing other mutant strains. Overseas epidemics have put enormous pressure on the prevention and control of imported epidemics in China. At present, China is facing the dual challenges of the import of delta and Omicron strains. Although the local epidemic situation in some areas can be effectively controlled in a short time on the whole, the Spring Festival transportation is about to begin, the flow and gathering of people are greatly increased, and the situation of epidemic prevention and control is still grim. In terms of covid-19 vaccination, covid-19 vaccination has made steady progress. According to the data of China’s National Health Commission, as of January 14, China had received a total of 2.93 billion doses of covid-19 virus vaccine. In the short to medium term, there is still great uncertainty about the global spread of the epidemic. Therefore, it is necessary to continue to pay attention to the investment opportunities of covid-19 prevention and control industry chain, including covid-19 detection reagents, oral drugs, vaccines and antibodies. At the same time, we can pay attention to the listed companies deeply involved in covid-19 prevention and control drug supply chain.
In terms of news, on January 14, the national medical security work conference was held in Beijing to comprehensively deploy the medical security work in 2022. The meeting made it clear that in 2022, the centralized drug purchase will still be carried out in an institutionalized and normal manner, strive to achieve a cumulative total of more than 350 national and provincial centralized drugs, solidly carry out the centralized purchase of high-value medical consumables, promote local governments to actively carry out the centralized purchase of drug consumption, and realize the pattern of promoting the centralized purchase of chemical drugs, biological drugs and Chinese patent medicines in an all-round way. In 2020, the localization rate of spine high-value medical consumables in China will be less than 50%, which will accelerate the domestic substitution in the field of centralized purchase of spine high-value medical consumables. On January 11, the National Health Commission issued the national eye health plan for the 14th five year plan (2021-2025), which pointed out that we should focus on key eye diseases such as myopia, ametropia, cataract, fundus disease, glaucoma and corneal blindness, so as to improve the eye health level of key people. The introduction of this plan will further increase the demand for ophthalmic devices. Previously, intraocular lenses for the treatment of cataract were included in centralized mining in some provinces. With the gradual implementation of centralized mining, ophthalmic device enterprises with strong product cost control ability will benefit.
From the outbreak of the traditional Chinese medicine sector to the active covid-19 detection and treatment industry chain driven by the continuous outbreak of the global epidemic driven by the Omicron variant, the pharmaceutical industry continued its point to area structural recovery. With the start of the expectation of interest rate increase in the United States and other overseas countries and the arrival of a new round of stable growth cycle in China, the overall market maintains a volatile trend. The market focus may focus on sectors with undervalued repair and high demand confirmation logic. It is suggested to pay attention to undervalued and strong growth sectors in the pharmaceutical industry structurally, Growth and valuation will quickly and dynamically match to a reasonable range over a period of time to complete a round of market. At the time point when the valuation switching is gradually approaching, the advance layout needs to pay particular attention to the marginal improvement and the sustainability of growth. In the long run, the pharmaceutical industry is currently at a historical low valuation. With the continuous promotion of the procurement of drugs and consumables, enterprises with relatively high safety margin, strong innovation ability, rich product pipelines and good competition pattern are expected to continue to benefit in the long cycle. It is suggested to focus on the industrial chain of innovative new drugs, high-end medical devices, medical consumption terminals and biological products, Meanwhile, second tier blue chips with relatively low valuation shall be excavated:
1) innovative drugs and innovative drug industry chain, including comprehensive and specialized innovative drug enterprises and CXO industry. It is recommended to pay attention to Jiangsu Hengrui Medicine Co.Ltd(600276) , Jiangsu Nhwa Pharmaceutical Co.Ltd(002262) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) , Wuxi Apptec Co.Ltd(603259) , Hangzhou Tigermed Consulting Co.Ltd(300347) , Pharmaron Beijing Co.Ltd(300759) and Apeloa Pharmaceutical Co.Ltd(000739) ;
2) it is recommended to pay attention to Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) and Lepu Medical Technology (Beijing) Co.Ltd(300003) for the leading high-end medical devices with outstanding import substitution ability;
3) for medical consumption terminals benefiting from increased market concentration, it is recommended to pay attention to Yixintang Pharmaceutical Group Co.Ltd(002727) , Yifeng Pharmacy Chain Co.Ltd(603939) and Dian Diagnostics Group Co.Ltd(300244) ;
4) biological product enterprises with scarcity and consumption attributes, including Changchun High And New Technology Industries (Group) Inc(000661) , Hualan Biological Engineering Inc(002007) , Cansino Biologics Inc(688185) – U and Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) .
Risk warning: covid-19 epidemic fluctuation risk
